Mid-Year Economic and Fiscal Outlook (MYEFO)

1st November 2009

The Federal Government today (2 November)  released its Mid-Year Economic and Fiscal Outlook (MYEFO). MYEFO presents the Government’s most up to date information on the condition of the Australian economy. The Treasurer noted that this is the first time a Commonwealth Government has delivered a net saving to the Budget in a Mid-Year Economic and Fiscal Update since they began in 1997-98.

The updated assessment forecasts that the Australian economy will grow by 1.5 per cent in 2009-10 and 2010-11. GDP growth is now projected to be 4 per cent in both 2011-12 and 2012-13 (compared with 4.5 per cent at Budget). In the medium term, the economy will return to its potential growth path in 2014-15, two years earlier than projected at Budget. Unemployment is forecast to peak at 6.75 per cent in the 2010 June quarter.

Notwithstanding this positive news, MYEFO also notes that the impacts of the global economic downturn still mean forecast tax receipts remain $170 billion lower than forecast at the time of the 2008-09 Budget. The Government forecast for the underlying cash deficit in 2009-10 remains largely unchanged from the Budget, at $57.7 billion (4.7 per cent of GDP). The Government forecast that in the three years from 2010-11 to 2012-13, the expected underlying cash deficit will improve by an average of 1 per cent of GDP each year. Accordingly, current projections are for the budget deficit to fall from 4.7 per cent of GDP in 2009-10, to 3.6 per cent of GDP in 2010-11, 2.3 per cent of GDP in 2011-12, and 1.1 per cent of GDP by 2012-13. Headline and underlying inflation are expected to be 2.25 per cent through the year to June in both 2009-10 and 2010-11.

The Government has identified that it will:

Other key points:

The MYEFO budget document can be accessed here.

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